Norman Broadb Regulatory News (NBB)

NORMAN BROADBENT PLC - Final Results

PR Newswire

London, April 24

Norman Broadbent plc, a leading provider of executive search and leadershipconsultancy services, announces its audited financial results for the yearended 31 December 2012.

Financial highlights

Pierce Casey, Executive Chairman of Norman Broadbent, said:

"We remain committed to achieving increased market share in the UK searchmarket whilst pursuing geographical and product diversification on a costefficient basis. This allows us to enhance our relationship with our UKclients, attract new clients and to develop scale through overseas revenues.The brand of Norman Broadbent is strong, not just in the UK but around theglobe and should continue to strengthen throughout 2013."

For further information please contact:

Norman Broadbent plc 020 7484 0000

Pierce Casey/Sue O'Brien/Ben Felton

Sanlam Securities UK Limited 020 7628 2200

Simon Clements/Virginia Bull/Catherine Miles

Notes to Editors

Norman Broadbent plc is a leading provider of executive search and leadershipconsultancy services. It offers board and executive search services, interimmanagement services and leadership consultancy services, such as executiveassessment and development, talent management, and executive coaching services.Headquartered in London, the group operates globally and has offices inBarcelona, Bogota, Brussels, Dublin, Limassol, Milan, Madrid, Paris, Singapore,Los Angeles and across the Middle East and North Africa.

For further information visit www.normanbroadbent.com

CHAIRMAN'S STATEMENT

INTRODUCTION

Norman Broadbent plc (the "Company" or the "Group") is a human capitalconsultancy which operates as a global executive search and leadershipconsultancy business, headquartered in London. It has a network of subsidiaryand licenced international offices providing international reach across Europe,Asia, North America, Latin America, Middle East and North Africa.

Following an oversubscribed share placing in November 2012 raising £742,560,the Group has extended its product offering via the establishment of twocomplementary, but separately branded businesses - Arcus Global Partners andConnecting Corporates - which provide flexible solutions to clients in themarket `below' our traditional board search practice and harness the power ofsocial media. The Company also acquired a controlling stake in an established,profitable Belgian leadership consulting and search business to extend thegeographic reach of the Norman Broadbent business. The Group continues toappraise further opportunities to diversify both geographically and in terms ofproduct offerings.

RESULTS FOR THE FINANCIAL YEAR

The table below summarises the results of the Group:

Group revenue for the year increased to £7.6 million from £6.9 million in 2011,an increase of 10.6 per cent, while operating profit before non-recurringrestructuring costs was maintained at £293,000 compared with £301,000 in theprevious year. The loss after tax, pre-minority interests, narrowedsubstantially to £115,000 from a loss of £561,000 in 2011.

Core board and executive search revenues increased by 11.7 per cent to £6.7million from £6.0 million in 2011. The search business contributed an operatingprofit before restructuring costs of £476,000 (2011: £464,000) which includesthe impact of start-up losses in the newly formed international subsidiaries inthe USA and Singapore.

The UK leadership consulting and assessment business did well to withstand thesad death in October 2012 of the founder of HADIL, who had remained asignificant revenue producer. We appointed his successor Carole Bodell, anexperienced leader in human capital businesses, to lead the business inNovember. Traction is now increasing albeit following an expected time lag. Inorder to leverage off the core brand, we have now integrated the business intoNorman Broadbent Leadership Consulting. With HADIL's core of exceptionaloccupational psychologists the practice is well placed to drive greater brandrecognition of our leadership assessment services.

Overseas royalties totalled £339,000 (2011: £333,000) which was highlycreditable given the weak economies pertaining in Spain and Italy, and theon-going geo-political tensions in the Middle East.

CORPORATE DEVELOPMENTS

2012 was another year of significant development for the Company with furtherexpansion overseas combined with strategic diversification of our core productsofferings. In November 2012, the Company acquired a 51 per cent stake in AckerDeboeck & Company, a well-established and profitable leadership consulting andsearch business based in Brussels. This firm, now rebranded Norman Broadbent,has integrated well into the Group. It has particularly enhanced the existingUK and international leadership consulting teams and the Directors believe thatleadership assessment and consulting will be an area of revenue growth over thenext few years given current market trends.

The two new international search businesses incorporated during the year inSingapore and USA, are now gaining traction in their respective territorieswith the increased brand awareness starting to lead to new business flow. Sincethe year ended 31 December 2012, we have also established (through our Belgiansubsidiary) a dedicated Paris based executive search company led by anexperienced local search professional.

As part of a strategy to leverage the Group's strengths and diversify from areliance on traditional retained executive search, the Company completed asuccessful, oversubscribed share placing in November 2012, raising £742,560,with some of the funds going towards establishing two complementary businesses:

Arcus Global Partners, led by Simon Vaughan-Edwards who joined the Group inMarch 2013, has been formed to provide existing and new clients withinnovative, tactical or strategic solutions for their human capital needs. Thisranges from contingent search for roles below full and operating board level,through to short term contracting, in-house RPO solutions, talent mapping andcandidate pipeline provision.

Connecting Corporates, trading through the established brands of "WinningWork"and "Social Media Search", provides rapid, bespoke, candidate lists forclient's in-house recruitment teams, using innovative search techniques throughmultiple social media and online channels. WinningWork is a sales managementtool used to exploit social media to drive sales in professional service firmsand those operating in a B2B environment.

I am pleased to report that, although both businesses are at a very early stageof development, they have started well; attracting high calibre talent, workingclosely with the Norman Broadbent Executive Search team and are currentlyoperating in line with management's expectations.

FINANCIAL POSITION

The consolidated Group statement of financial position was strengthened throughthe November 2012 placing of 2,121,600 new ordinary shares, raising £727,560net of £15,000 expenses. As at 31 December 2012 consolidated net assets were £3.2 million, compared to £2.3 million as at 31 December 2011. Group net currentassets increased to £1.09 million (2011: £0.47 million) while Group cashincreased to £1.0 million (£0.65 million).

During the year under review, the Group repaid its residual term loan of £109,000 in full and in addition reduced the outstanding deferred considerationfrom the Norman Broadbent acquisition in 2008 from £481,000 to £73,000 at 31December 2012. This £73,000 balance was repaid shortly after the year end. TheGroup now has no bank debt other than its on-going invoice discountingfacility, which had a balance outstanding of £965,000 at the year-end (2011: £625,000). This was higher in 2012 due to the increase in sales and the improvedaging profile of the trade receivables at the year-end compared with 2011.

From March 2013, all Spanish royalties are retained by the Company, as comparedto the previous arrangement whereby the payments flowed through on a quarterlybasis to satisfy the outstanding deferred consideration.

OPERATIONAL EFFICIENCIES

As a group we continually review our processes and our cost base to ensure itis effective, cost efficient and fit for the changing market conditions inwhich we operate. During the year we agreed new, more efficient IT contractsand moved our core database onto an innovative cloud based product. Since theyear end we have signed a new lease on our head office in St James's Square onmore favourable terms and we expect to have sufficient space to accommodate thenew UK subsidiary businesses until at least the end of 2013.

These savings will have a meaningful positive impact on the monthly fixedoverhead of the Group from the second quarter of 2013.

BUSINESS DEVELOPMENT

Our UK search practice has a quality, though relatively concentrated clientbase from which it continues to enjoy considerable repeat levels of business.Over recent years it is evident that the retained executive search market hasbecome more competitive as clients successfully source more senior talentonline or through contingent suppliers. Our Group now has the ability toprovide these solutions to UK clients through Arcus Global Partners andConnecting Corporates, thereby allowing us to expand our client base both inretained search and these new complimentary services. Over time we anticipateextending the Arcus Global Partners and Connecting Corporates offeringsinternationally.

CURRENT TRADING AND OUTLOOK

The continued diversification in 2012 and early 2013 has resulted in a morerobust Group with a compelling suite of service offerings in an environmentwhere traditional retained search has seen revenues decline across theindustry, but particularly in the UK and Europe. Our UK search revenues for thefirst quarter of 2013 were lower than the first quarter in 2012, in part due tothe industry challenges and partly caused by a reduced number of searchconsultants compared with last year. However, we have a lower comparable fixedcost base, no further expected restructuring costs and the operationalefficiencies flagged above should compensate for this reduction in revenues.The current UK search pipeline is reasonable and we are pleased with initialprogress in the new USA, Singapore and Paris offices following recentsuccessful launch events in these territories.

The Board believes that our more potent, diversified offerings will, in theabsence of unforeseen circumstances, lead to a larger more profitable Groupover the next few years.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31 December 2012

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2012

CONSOLIDATED STATEMENT OF CASH FLOW

For the year ended 31 December 2012

The consolidated financial statements of Norman Broadbent plc ("NormanBroadbent" or "the Company") have been prepared in accordance withInternational Financial Reporting Standards as adopted by the European Union(IFRS as adopted by the EU), IFRIC interpretations and the Companies Act 2006applicable to Companies reporting under IFRS. The consolidated financialstatements have been prepared under the historical cost convention, as modifiedby the revaluation of financial assets and liabilities (including derivativeinstruments) at fair value through profit or loss.

The preparation of financial statements in conformity with IFRS requires theuse of certain critical accounting estimates. It also requires management toexercise its judgement in the process of applying the Group's accountingpolicies. The areas involving a higher degree of judgement or complexity, orareas where assumptions and estimates are significant to the consolidatedfinancial statements are disclosed in notes to the financial statements.

The financial information set out above does not comprise the Company'sstatutory accounts for the periods ended 31 December 2012 or 31 December 2011.Statutory accounts for 31 December 2011 have been delivered to the Registrar ofCompanies and those for 31 December 2012 will be delivered following theCompany's Annual General Meeting. The auditors have reported on those accounts;their report was unqualified, did not include references to any matters towhich the auditors drew attention by way of emphasis of matter withoutqualifying their report and did not contain statements under section 498(2) or(3) of the Companies Act 2006 in respect of the accounts for 2012 or for 2011.

Going concern

The Group reported an operating loss in the year to 31 December 2012 of £38,000compared with an operating loss of £501,000 in 2011. However these losses wereprimarily driven by residual one-off planned restructuring costs in the UKsearch business totalling £331,000 (2011: 802,000), which will not be repeatedin 2013.

The Consolidated Statement of Financial Position shows a strong net assetposition at 31 December 2012 of £3.22 million (2011: £2.29 million) with cashat bank of £1.01 million (2011: £0.65 million). At the date that thesefinancial statements were approved the only bank debt owed by the Company wasits invoice discounting facility which is secured by the Group's tradereceivables.

In light of the current financial position of the Group and on consideration ofthe business' forecasts and projections, taking account of possible changes intrading performance, the directors have a reasonable expectation that the Grouphas adequate available resources to continue as a going concern for theforeseeable future. For these reasons, they continue to adopt the going concernbasis in preparing their annual report and financial statements.

2. SEGMENTAL ANALYSIS

Management has determined the operating segments based on the reports reviewedregularly by the board for use in deciding how to allocate resources and inassessing performance. The Board considers Group operations from both a classof business and geographic perspective.

Each class of business derives its revenues from the supply of a particularrecruitment related service, from retained executive search through toexecutive assessment and coaching. Business segment results are reviewedprimarily to operating profit level, which includes employee costs, marketing,office and accommodation costs and appropriate recharges for management time.

Group revenues are primarily driven from UK operations however, when revenue isderived from overseas business the results are presented to the Board bygeographic region to identify potential areas for growth or those posingpotential risks to the Group.

i) Class of Business:

The analysis by class of business of the Group's turnover, profit beforetaxation and net assets/ (liabilities) is set out below:

The unallocated costs refer to central costs of the Group including salaries,professional and other costs, which are not directly attributable to thedelivery of the services. The four segments shown represent the managementinformation provided to the Board and in the opinion of the directors reflectthe nature of the Group's services.

ii) Geographic Region:

The analysis by geographic region of the Group's turnover, profit beforetaxation and net assets/ (liabilities) is set out below:

Turnover by location is not materially different from turnover by destination.

3. (LOSS) / PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION

Depreciation and impairment of property, plant and 84 79equipment

The Company audit fee in the year was £11,500 (2011: £10,000).

4. RE-STRUCTURING COSTS

Re-structuring costs include residual personnel costs relating to the hiring ofnew consultants in 2011, exiting of under-performing staff and externalrecruitment consultancy costs relating to the new hires.

These items have been highlighted in the consolidated statement ofcomprehensive income because separate disclosure is considered appropriate inunderstanding the underlying performance of the business.

The emoluments of the directors are disclosed as required by the Companies Act2006 on page 9 of the Report and Accounts in the Directors' RemunerationReport.

6. TAX EXPENSE

(a) Tax charged in the income statement

(b) Reconciliation of the total tax charge

At 31 December 2012 the Group had capital losses carried forward of £8,130,000(2011: £8,130,000). A deferred tax asset has not been recognised for thecapital losses as the recoverability in the near future is uncertain. The Groupalso has £10,000,000 (2011: £10,000,000) trading losses carried forward, whichincludes £8,987,000 losses transferred from BNB Recruitment Consultancy Ltd in2011. A deferred tax asset of £1,613,000 has not been recognised in thefinancial statements due to the inherent uncertainty as to the quantum andtiming of its utilisation.

The analysis of deferred tax in the consolidated balance sheet is as follows:

This is calculated by dividing the profit attributable to equity holders of theCompany by the weighted average number of ordinary shares in issue during theperiod:

ii) Diluted earnings per share

This is calculated by adjusting the weighted average number of ordinary sharesoutstanding to assume conversion of all dilutive potential ordinary shares. TheCompany has two categories of dilutive potential ordinary shares: share optionsand warrants. For these options and warrants, a calculation is done todetermine the number of shares that could have been acquired at fair value(determined as the average annual market share price of the Company's shares)based on the monetary value of the subscription rights attached to theoutstanding warrants and options. The number of shares calculated as above iscompared with the number of shares that would have been issued assuming theexercise of the share options.

iii) Adjusted earnings per share

An adjusted earnings per share has also been calculated in addition to thebasic and diluted earnings per share and is based on earnings adjusted toeliminate the effects of charges for share based payments. It has beencalculated to allow shareholders to gain a clearer understanding of the tradingperformance of the Group.

Adjusted earnings (56) (0.52) (0.52) (486) (5.16) (5.16)

9. PROFIT OF PARENT COMPANY

As permitted by Section 408 of the Companies Act 2006, the income statement ofthe parent company is not presented as part of these accounts. The parentcompany's profit for the year amounted to £192,000 (2011: loss of £150,000).

Goodwill acquired through business combinations is allocated to cash-generatingunits (CGU) identified at entity level. The carrying value of intangiblesallocated by CGU is shown below:

The goodwill attributed to the Norman Broadbent entity can be split into twofurther CGU's, cash generated from the retained Executive Search and leadershipconsultancy business of £1,212,000 (2011: £1,100,000) and cash generated fromInternational Royalties of £650,000 (2011: £650,000).

In line with International Financial Reporting Standards, goodwill has not beenamortised from the transition date, but has instead been subject to animpairment review by the directors of the Group. As set out in accountingpolicy note 1 on page 18, the directors test the goodwill for impairmentannually. The recoverable amount of the Group's CGUs are calculated on thepresent value of their respective expected future cash flows, applying aweighted average cost of capital in line with businesses in the same sector.Pre-tax future cash flows for the next five years are derived from the approvedforecasts for the 2013 financial year.

The key assumption applied to the forecasts for the business is that return onsales for Norman Broadbent is expected to be a minimum of 10 per cent per annumfor the foreseeable future (2011: 10 per cent) and 7% for Human AssetDevelopment International (2011: 10 per cent). Return on sales defined as theexpected profit before tax on net revenue. There are only minimal non cashflows included in profit before tax. The rate used to discount the forecastcash flows is 12 per cent (2011: 12 per cent).

The five year forecasts have been prepared using conservative revenue growthrates to reflect the uncertainty that is still present in the economy. Based onthe above assumptions, at 31 December 2012 the recoverable value of the NormanBroadbent CGU is £2,991,000 and the Human Asset Development International CGUis £180,000. Return on sales would need to fall below 7 per cent for the NormanBroadbent goodwill to be impaired and below 2 per cent for Human AssetDevelopment International goodwill to be impaired.

11. PROPERTY, PLANT AND EQUIPMENT

The Group had no capital commitments as at 31 December 2012 (2011: £Nil).

The above assets are owned by Group companies; the Company has no fixed assets.

During the year, the company acquired a 51 per cent interest in Acker Deboeckand Company for a total consideration of £248,000 (see note 23). The Companyalso incorporated wholly owned subsidiaries in Singapore and USA, with combinedshare capital of £7,000. Funding for the growth of these subsidiaries will beprovided through Group treasury in the form of inter-company loans.

At 31 December 2012 the Company held the following ownership interests:

* The 20% shareholding in this company is owned by Norman Broadbent OverseasLtd, a wholly owned subsidiary of the Company.

14. TRADE AND OTHER RECEIVABLES

Less: provision for impairment (20) (87) - -

Prepayments and accrued income 278 412 5 6

As at 31 December 2012, Group trade receivables of £836,000 (2011: £820,000)were past their due date but not impaired. They relate to customers with nodefault history. The aging profile of these receivables is as follows:

The largest amount due from a single debtor at 31 December 2012 represents10.86% (2011: 11.07%) of the total trade receivables balance outstanding.

As at 31 December 2012, Group trade receivables of £20,000 (2011: £87,000) werepast their due date and impaired. A provision for impairment for the fullamount has been recognised in the financial statements. Movements on theGroup's provision for impairment of trade receivables are as follows:

Other than the impairment provision provided for aged trade receivables above,there are no other material difference between the carrying value and the fairvalue of the Group's and parent company's trade and other receivables.

There is no material difference between the carrying value and the fair valueof the Group's and parent company's cash at bank and in hand.

Other taxation and social security 317 323 (3) (11)

There is no material difference between the carrying value and the fair valueof the Group's and parent company's trade and other payables.

17. BORROWINGS

Maturity profile of borrowings 2012 2011 2012 2011

The carrying amounts and fair value of the Group's borrowings, which are alldenominated in sterling, are as follows:

a. Invoice discounting facility

Norman Broadbent Executive Search Limited operates an invoice discountingfacility. Funds are available to be drawn down at an advance rate of 75%against trade receivables of Norman Broadbent Executive Search Limited that areaged less than 120 days, with the facility capped at £1,500,000. At 31 December2012, the outstanding balance on the facility of £965,000 (2011: £625,000) wassecured by trade receivables of £1,450,000 (2011: £1,229,000) and a crosscorporate guarantee and indemnity deed dated 20 July 2011. Interest is chargedon the drawn down funds at a rate of 2.75% above the bank base rate (2011:2.75%).

b. Deferred consideration

The balance outstanding at 31 December 2012 of £73,000 was settled in full on 7February 2013. There are no further liabilities, warranties or obligationsoutstanding in relation to the deferred consideration.

18. FINANCIAL INSTRUMENTS

The principle financial instruments used by the Group, from which financialinstrument risk arises, are summarised below. All financial assets andliabilities are measured at amortised cost which is not considered to bematerially different to fair value.

In common with all other businesses, the Group is exposed to risks that arisefrom its use of financial instruments. Details on these risks and the policiesset out by the Board to reduce them can be found in Note 2 of the Report andAccounts.

19. SHARE CAPITAL AND PREMIUM

Deferred A Shares of 4.0p each

The Deferred A Shares carry no right to dividends or distributions or toreceive notice of or attend general meetings of the company. In the event of awinding up, the shares carry a right to repayment only after the holders ofOrdinary Shares have received a payment of £10 million per Ordinary Share.The company retains the right to cancel the shares without payment to theholders thereof. The rights attaching to the shares shall not be varied by thecreation or issue of shares ranking parri passu with or in priority to theDeferred A Shares.

Deferred Shares of 0.4p each

The Deferred Shares carry no right to dividends, distributions or to receivenotice of or attend general meetings of the company. In the event of a windingup, the shares carry a right to repayment only after payment of capital paid upon Ordinary Shares plus a payment of £10,000 per Ordinary Share. The companyretains the right to transfer or cancel the shares without payment to theholders thereof.

Deferred B Shares of 42.0p each

The Deferred B Shares carry no right to dividends or distributions or toreceive notice of or attend general meetings of the company. In the event of awinding up, the shares carry the right to repayment only after the holders ofOrdinary Shares have received a payment of £10 million per Ordinary Share. Thecompany retains the right to cancel the shares without payment to the holdersthereof. The rights attaching to the shares shall not be varied by the creationor issue of shares ranking parri passu with or in priority to the Deferred BShares.

Deferred Shares of 29.0p each

The Deferred Shares carry no right to dividends or distributions or to receivenotice of or attend general meetings of the company. In the event of a windingup, the shares carry the right to repayment only after the holders of OrdinaryShares have received a payment of £10,000 per Ordinary Share. The companyretains the right to cancel the shares without payment to the holders thereof.

a. Share placing in May 2011:

At the Annual General Meeting of the Company on 31 May 2011, a specialresolution was passed to allot 2,692,308 new ordinary 1.0p shares for a totalcash consideration of £1,750,000.

b) Share placing in November 2012:

On 13 November 2012, the Company issued 2,121,600 new ordinary 1.0p shares fora total cash consideration of £742,000. Transaction costs of £15,000 wereincurred resulting in net cash proceeds of £727,000.

20. SHARE BASED PAYMENTS

20.1 Share Options

The Company has an approved EMI share option scheme for full time employees anddirectors and had an unapproved share option scheme under which options tosubscribe for the Company's shares were granted to connected parties, whichexpired in 2011. The exercise price of the granted options is equal to themarket price of the shares on the date of the grant. The Company has no legalor constructive obligation to repurchase or settle the options or warrants incash.

Options under the Company EMI scheme are conditional on the employee completingthree years' service (the vesting period). The EMI options vest in three equaltranches on the first, second and third anniversary of the grant. The optionshave a contractual option term of ten years.

Options under the unapproved scheme lapsed in March 2011.

Movements in the number of share options and their related weighted averageexercise prices are as follows:

Out of the 996,240 outstanding options (2011: 1,182,058), no options wereexercisable at the year end (2011: 75,555) as they were all `underwater'.

The weighted average fair value of the share options granted in 2011,determined using the Trinomial Valuation Model, was 37.5 pence (options grantedin 2010: 21.3 pence). The significant inputs into the model were weightedaverage share price of 65.5 pence at the grant date (2010: 52.5 pence),exercise price shown above, volatility of 75% (2010: 85%), dividend yield of 0%(2010: 0%), an expected option life of 10 years (2010: 10 years) and an annualrisk-free interest rate of 3.38% (2010: 3.65%). The expected volatility wasestimated by reference to the historical volatility of the Company's shareprice and those of UK quoted companies in a similar business sector. Therisk-free interest rate is estimated as the yield on zero coupon UK governmentbonds of a term consistent with the contractual life of the options granted.

20.2 Warrants

On 14 June 2010, the Company issued warrants over shares in the Company to twodirectors and a connected party on the basis of one warrant for one ordinaryshare. The warrants have an exercise price of 45 pence, can be exercised infull or in part immediately and expire on 31 May 2013.

Out of the 166,666 outstanding warrants (2011: 166,666), 166,666 warrants wereexercisable in the year (2011: 166,666).

See Note 65 for the total expense recognised in the income statement for shareoptions and warrants granted to directors and employees.

21. LEASES

Operating leases

The Group leases all its premises. The terms of the leases vary for eachproperty and are tenant repairing.

Later than one year and not later than five years - 117

On the 6 March 2013 the directors signed a new lease for the Company'sprinciple office at 12 St James's Square, London on substantially improvedfinancial terms. The new lease commences on 30 April 2013 for 10 years with theoption to break after 5 years.

22. PENSION COSTS

The Group operated several defined contribution pension schemes for thebusiness. The assets of the schemes were held separately from those of theGroup in independently administered funds. The pension cost representscontributions payable by the Group to the funds and amounts to £182,000 (2011:£177,000). At the year end £18,000 of contributions were outstanding (2011: £17,000).

23. BUSINESS COMBINATIONS

On the 1 November 2012, the Company obtained control of Acker Deboeck andCompany SPRL, an executive search and leadership consultancy businessheadquartered in Brussels, by acquiring 51 per cent of the shares and votinginterests in the company. The acquisition of Acker Deboeck, renamed NormanBroadbent SPRL in January 2013, will extend the European reach of the NormanBroadbent executive search brand whilst significantly enhancing the leadershipconsulting and board evaluation services of the Group.

In the two months to 31 December 2012, Acker Deboeck contributed revenue of £114,000 and profit before tax of £34,000 to the Group's results. If theacquisition had occurred on 1 January 2012, management estimates that thesubsidiary would have contributed revenue of £560,000 and pre-tax profit forthe year of £140,000.

a. Equity Instruments issued - the fair value of the ordinary shares issued

was based on the listed share price of the Company at 1 November 2012 of 35

pence per share.

Identifiable assets acquired and liabilities assumed:

The following fair values have been determined on a provisional basis:

a. Trade receivables comprise gross contractual amounts of £60,000 and £14,000

b. The corporation tax liability of £135,000 represents a provision for the

expected tax liability of the company calculated by an independent tax

firm. Once the formal year end tax computation has been prepared any

material adjustments to the provision would need to be factored in to the

acquisition calculation.

If new information obtained within one year from the acquisition date aboutfacts and circumstances that existed at the acquisition date identifiesadjustments to the above amounts, or any additional provisions that existed atthe acquisition date, then the acquisition accounting will be revised.

Goodwill:

Goodwill was recognised as a result of the acquisition as follows:

The goodwill is attributable mainly to the skills and technical talent of AckerDeboeck's employees and the enhanced revenue generating ability of the Group,particularly the leadership consulting and board evaluation services, for whichAcker Deboeck has a demonstrable track record of delivering.

Acquisition-related costs:

The Company incurred acquisition related legal costs of £10,000. These costshave been included in "operating expenses" in the consolidated statement ofcomprehensive income.

24. RELATED PARTY TRANSACTIONS

The following transactions were carried out with related parties:

Andrew Garner Associates Limited - 261

During the year Adelaide Capital Limited invoiced the Group for the directors'fees of P Casey (£125,000), B Stephens (£15,000) and business related travelcosts of £1,000. From October 2012 Brian Stephens & Company Ltd invoiced theGroup for the directors' fees of B Stephens (£5,000). P Casey and B Stephenswere directors of Adelaide Capital Limited during the year. B Stephens is adirector of Brian Stephens & Company Ltd.

Taxation and company secretarial services of £11,000 were acquired fromAnderson Barrowcliff LLP, an accountancy firm of which R Robinson is a partner.Anderson Barrowcliff also invoices the Group for R Robinson's director's fees(£20,000).

During the year the company incurred rechargeable costs (£4,000) and fee splitsrelating to jointly executed overseas searches (£4,000) from NBS NormanBroadbent SA. The Group owns a 20% stake in NBS Norman Broadbent SA.

All related party expenditure took place via "arms-length" transactions.

NBS Norman Broadbent SA 253 236

During the year the company invoiced NBS Norman Broadbent SA for royalty income(£241,000), rechargeable costs (£4,000) and fee splits relating to jointlyexecuted overseas searches (£8,000).

All related party transactions took place at "arms-length".

c. Key management compensation:

Key management includes executive and non-executive directors. The compensationpaid or payable to the directors can be found in the Directors' RemunerationReport on page 9.

d. Year-end payables arising from the purchases of services:

Brian Stephens & Company Ltd 4 -

Payables to related parties arise from purchase transactions and are due onemonth after date of purchase. Payables bear no interest.

e. Year-end receivables arising from the sale of services:

NBS Norman Broadbent SA 68 50

Receivables owed by related parties arise from sales transactions and are dueone month after date of purchase. Payables bear no interest.

f. Loans from related parties:

In order to assist the working capital position, certain directors havehistorically advanced loans to the Group, which were non-interest bearing andhad no formal repayment terms.

The Company is a member of the Norman Broadbent plc Group VAT scheme. As suchit is jointly accountable for the combined VAT liability of the Group. Thetotal VAT outstanding in the Group at the year-end was £162,000 (2011: £115,000).

Under Section 17 of the Landlord and Tenant (Covenants) Act 1995 the Companyhas a contingent liability in respect of the lease on its previous registeredoffice, which was assigned to a third party in April 2010. The Company could berequired to meet the financial obligations of the lease should the assigneedefault on lease payments. The maximum potential liability would be £120,000per annum expiring on 31 December 2015. The directors believe the likelihood ofthe assignee defaulting prior to expiry is remote due to the financial healthand balance sheet position of the tenant, reviewed in their last publishedfinancial statements in March 2013.

27. AVAILABILITY OF REPORT AND ACCOUNTS

Copies of the report and accounts will be posted to shareholders shortly andwill be available on request from the Company's registered office at 12 StJames's Square, London, SW1Y 4LB. Copies are also available on the Company'swebsite: www.normanbroadbent.com